Exhibit 99.1
OTI Reports Second Quarter 2017 Financial Results
| ● | Revenues increase 73% compared to prior quarter and 44% compared to same year-ago period |
| ● | Gross profit increase 56% quarter-over-quarter and 42% compared to year ago period |
| ● | Company reports net profit and improved adjusted EBITDA |
| ● | Entered strategic partnership with 365 Retail Markets to serve MicroMarket in the U.S. |
ROSH PINNA, ISRAEL — August 9, 2017 —On Track Innovations Ltd. (OTI) (NASDAQ:OTIV), a global provider of near field communication (NFC) and cashless payment solutions, reported financial results for the second quarter ended June 30, 2017.
Q2 2017 Operational Highlights
| ● | Delivered first batch of 3,000 payment systems to the Japanese market. |
| ● | Signed global supply agreement with Dover Fueling Solutions, facilitating entry into North American fueling market |
| ● | Announced with Apriva the launch of a semi-integrated solution for unattended market |
Q2 2017 Financial Details
| ● | Total quarterly revenue increased to $6.9 million, a 73% increase from $4.0 million in the prior quarter and a 44% increase from $4.8 million in the same year-ago period. |
| ● | Gross profit increased to $3.5 million (50% of revenues), a 56% increase over $2.2 million (55% of revenues) in the prior quarter and an increase of 42% over $2.5 million (51% of revenues) in the same year-ago period. |
| ● | Net income from continuing operations totaled $86,000 or $0.002 per share, an improvement from a net loss from continuing operations of $782,000 or $(0.02) per share in the prior quarter and an improvement from a net loss from continuing operations of $598,000 or $(0.02) per share in the same year-ago period. |
| ● | Adjusted EBITDA income from continuing operations improved to $536,000, an improvement from a loss of $309,000 in the prior quarter and an improvement from a loss of $133,000 in the same year-ago period (see discussion about the presentation of adjusted EBITDA from continuing operations, a non-GAAP financial measure, below). |
Management Commentary- Shlomi Cohen (OTI CEO)
“The second quarter of 2017 marks a significant milestone in our plan to bring OTI to its full potential. We are pleased to report quarterly revenues of more than $6.9 million dollars and quarterly positive adjusted EBITDA income of more than $500,000. This represents not only the highest quarterly revenue level since we started our overhaul of OTI’s operations two years ago, but also the highest quarterly revenue achieved since the second quarter of 2014.”
“Our achievements for the second quarter of 2017 result from significant growth in both our retail segment and petroleum segment. In our retail segment, we saw increased sales and the delivery of new products into new and expanding markets and verticals together with outstanding achievement to recover in very short time on lost accounts. In the US market alone we saw a growth of 200% in our reader sales compared to the prior quarter. In our PetroSmart division, we saw during the second quarter of 2017 a revenue growth of more than 100% compared to the first quarter, resulting from long-term efforts to grow existing and new opportunities. In total the second quarter of 2017 presented an increase in revenues of more than 70% compared to the prior quarter and more than 40% compared to the second quarter of 2016 together with positive adjusted EBITDA.”
“We followed our plans, executed our strategy, and delivered the expected results. For the long term, I strongly believe that we will continue to see growth within our different verticals and present a positive adjusted EBITDA in 2017.”
Conference Call
OTI will hold a conference call on Wednesday, August 9 at 9:00 AM EDT to discuss results for the second quarter of 2017.
OTI CEO Shlomi Cohen and CFO Yishay Curelaru will host the presentation, followed by a question and answer period.
| Date: | Wednesday, August 9th, 2017 |
| Time: | 9:00 AM Eastern Daylight Time (EDT) |
| Toll-Free Dial-In Number: | 1-877-870-4263 |
| International Dial-In Number: | 1-412-317-0790 |
| Conference Title: | On Track Innovations Ltd. Q2 Earnings Conference Call |
The conference call will be broadcast simultaneously and available for replayhere and via the investor relations section of the company’s website.
Please call the conference telephone number five minutes prior to the start time and request to be joined to the “On Track Innovations Ltd. Q2 Earnings Conference Call”.
Use of Non-GAAP Financial Information
This press release contains certain non-GAAP measures, namely, adjusted EBITDA from continuing operations, or adjusted earnings from continuing operations before interest, income tax, depreciation and amortization. Adjusted EBITDA from continuing operations represents earnings before interest or financing expenses, income tax, depreciation and amortization, and further eliminates the effect of stock-based compensation expense. OTI believes that adjusted EBITDA from continuing operations should be considered in evaluating the company’s operations since it provides a clear indication of OTI’s operating results. This measure should be considered in addition to results prepared in accordance with U.S. GAAP, but should not be considered a substitute for the U.S. GAAP results. The non-GAAP measures included in this press release have been reconciled to the U.S. GAAP results in the tables below.
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ON TRACK INNOVATION LTD.
INTERIM UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share data)
| June 30, | December 31, | |||||||
| 2017 | 2016 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 6,242 | $ | 5,952 | ||||
| Short-term investments | 3,084 | 5,585 | ||||||
| Trade receivables (net of allowance for doubtful accounts of $694 and $720 as of June 30, 2017 and December 31, 2016, respectively) | 6,843 | 5,620 | ||||||
| Other receivables and prepaid expenses | 1,554 | 1,638 | ||||||
| Inventories | 3,180 | 3,069 | ||||||
| Total current assets | 20,903 | 21,864 | ||||||
| Long-term restricted deposit for employees benefit | 500 | 453 | ||||||
| Severance pay deposits | 355 | 322 | ||||||
| Property, plant and equipment, net | 5,967 | 5,788 | ||||||
| Intangible assets, net | 351 | 278 | ||||||
| Total Assets | $ | 28,076 | $ | 28,705 | ||||
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ON TRACK INNOVATION LTD.
INTERIM UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share data)
| June 30, | December 31, | |||||||
| 2017 | 2016 | |||||||
| Liabilities and Equity | ||||||||
| Current Liabilities | ||||||||
| Short-term bank credit and current maturities of long-term bank loans | $ | 4,663 | $ | 4,369 | ||||
| Trade payables | 7,104 | 6,957 | ||||||
| Other current liabilities | 1,991 | 2,822 | ||||||
| Total current liabilities | 13,758 | 14,148 | ||||||
| Long-Term Liabilities | ||||||||
| Long-term loans, net of current maturities | 1,041 | 1,215 | ||||||
| Accrued severance pay | 918 | 811 | ||||||
| Deferred tax liability | 452 | 373 | ||||||
| Total long-term liabilities | 2,411 | 2,399 | ||||||
| Total Liabilities | 16,169 | 16,547 | ||||||
| Commitments and Contingencies | ||||||||
| Equity | ||||||||
| Shareholders’ Equity | ||||||||
| Ordinary shares of NIS 0.1 par value: Authorized – 50,000,000 shares as of June 30, 2017 and December 31, 2016; issued: 42,288,077 and 42,243,075 shares as of June 30, 2017 and December 31, 2016, respectively; outstanding: 41,109,378 and 41,064,376 shares as of June 30, 2017 and December 31, 2016, respectively | 1,062 | 1,061 | ||||||
| Additional paid-in capital | 224,603 | 224,415 | ||||||
| Treasury shares at cost - 1,178,699 shares as of June 30, 2017 and December 31, 2016 | (2,000 | ) | (2,000 | ) | ||||
| Accumulated other comprehensive loss | (904 | ) | (1,236 | ) | ||||
| Accumulated deficit | (210,854 | ) | (210,082 | ) | ||||
| Total Equity | 11,907 | 12,158 | ||||||
| Total Liabilities and Equity | $ | 28,076 | $ | 28,705 | ||||
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ON TRACK INNOVATION LTD.
INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands)
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2017 | 2016* | 2017 | 2016* | |||||||||||||
| Revenues | ||||||||||||||||
| Sales | $ | 5,646 | $ | 3,584 | $ | 8,426 | $ | 6,946 | ||||||||
| Licensing and transaction fees | 1,300 | 1,226 | 2,540 | 2,436 | ||||||||||||
| Total revenues | 6,946 | 4,810 | 10,966 | 9,382 | ||||||||||||
| Cost of revenues | ||||||||||||||||
| Cost of sales | 3,476 | 2,360 | 5,276 | 4,609 | ||||||||||||
| Total cost of revenues | 3,476 | 2,360 | 5,276 | 4,609 | ||||||||||||
| Gross profit | 3,470 | 2,450 | 5,690 | 4,773 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Research and development | 889 | 747 | 1,591 | 1,468 | ||||||||||||
| Selling and marketing | 1,492 | 1,321 | 2,834 | 2,674 | ||||||||||||
| General and administrative | 939 | 902 | 1,795 | 1,826 | ||||||||||||
| Total operating expenses | 3,320 | 2,970 | 6,220 | 5,968 | ||||||||||||
| Operating income (loss) from continuing operations | 150 | (520 | ) | (530 | ) | (1,195 | ) | |||||||||
| Financial expenses, net | (39 | ) | (62 | ) | (110 | ) | (155 | ) | ||||||||
| Income (loss) from continuing operations before taxes on income | 111 | (582 | ) | (640 | ) | (1,350 | ) | |||||||||
| Income tax | (25 | ) | (16 | ) | (56 | ) | (32 | ) | ||||||||
| Net income (loss) from continuing operations | 86 | (598 | ) | (696 | ) | (1,382 | ) | |||||||||
| Net income (loss) from discontinued operations | 7 | 1,947 | (76 | ) | 1,803 | |||||||||||
| Net income (loss) | 93 | 1,349 | (772 | ) | 421 | |||||||||||
| Net (income) loss attributable to non-controlling interest | - | (36 | ) | - | 27 | |||||||||||
| Net income (loss) attributable to shareholders | $ | 93 | $ | 1,313 | $ | (772 | ) | $ | 448 | |||||||
| Basic and diluted net income (loss) attributable to shareholders per ordinary share | ||||||||||||||||
| From continuing operations | ** | (0.02 | ) | (0.02 | ) | (0.03 | ) | |||||||||
| From discontinued operations | ** | 0.05 | ** | 0.04 | ||||||||||||
| $ | ** | $ | 0.03 | $ | (0.02 | ) | $ | 0.01 | ||||||||
| Weighted average number of ordinary shares used in computing basic and diluted net income (loss) per ordinary share | 41,095,788 | 40,896,863 | 41,087,729 | 40,885,668 | ||||||||||||
* Reclassified to conform with the current period presentation.
** Less than $0.01 per ordinary share.
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ON TRACK INNOVATIONS LTD.
INTERIM UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENT
The following tables reflect selected On Track Innovations Ltd. non-GAAP results reconciled to GAAP results:
(In thousands)
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Net Income (Loss) | $ | 93 | $ | 1,349 | $ | (772 | ) | $ | 421 | |||||||
| Net (income) loss from discontinued operations | (7 | ) | (1,947 | ) | 76 | (1,803 | ) | |||||||||
| Financial expenses, net | 39 | 62 | 110 | 155 | ||||||||||||
| Depreciation | 302 | 309 | 583 | 617 | ||||||||||||
| Taxes on income | 25 | 16 | 56 | 32 | ||||||||||||
| Total EBITDA FROM CONTINUING OPERATIONS | $ | 452 | $ | (211 | ) | $ | 53 | $ | (578 | ) | ||||||
| Stock-based compensation | 84 | 78 | 174 | 105 | ||||||||||||
| Total adjusted EBITDA FROM CONTINUING OPERATIONS | $ | 536 | $ | (133 | ) | $ | 227 | $ | (473 | ) | ||||||
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ON TRACK INNOVATION LTD.
INTERIM UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
(In thousands)
| Six months ended June 30, | ||||||||
| 2017 | 2016* | |||||||
| Cash flows from continuing operating activities | ||||||||
| Net loss from continuing operations | $ | (696 | ) | $ | (1,382 | ) | ||
| Adjustments required to reconcile net loss to net cash used in continuing operating activities: | ||||||||
| Stock-based compensation related to options issued to employees and others | 174 | 105 | ||||||
| Accrued interest and linkage differences, net | (47 | ) | 55 | |||||
| Depreciation | 583 | 617 | ||||||
| Deferred tax, net | 21 | 32 | ||||||
| Gain on sale of fixed assets | (7 | ) | - | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accrued severance pay, net | 74 | (151 | ) | |||||
| Increase in trade receivables, net | (1,151 | ) | (1,115 | ) | ||||
| Decrease in other receivables and prepaid expenses | 90 | 215 | ||||||
| (Increase) decrease in inventories | (47 | ) | 590 | |||||
| (Decrease) increase in trade payables | (396 | ) | 290 | |||||
| Decrease in other current liabilities | (855 | ) | (453 | ) | ||||
| Net cash used in continuing operating activities | (2,257 | ) | (1,197 | ) | ||||
| Cash flows from continuing investing activities | ||||||||
| Purchase of property and equipment, net | (98 | ) | (139 | ) | ||||
| Change in short-term investments, net | 2,500 | (884 | ) | |||||
| Investment in capitalized product costs | (157 | ) | (98 | ) | ||||
| Proceeds from restricted deposit for employee benefits | 44 | - | ||||||
| Advance payment from sale of property | - | 396 | ||||||
| Proceeds from sale of fixed assets | 12 | - | ||||||
| Net cash provided by (used in) continuing investing activities | 2,301 | (725 | ) | |||||
| Cash flows from continuing financing activities | ||||||||
| Increase in short-term bank credit, net | 213 | 81 | ||||||
| Proceeds from long-term bank loans | - | 27 | ||||||
| Repayment of long-term bank loans | (374 | ) | (538 | ) | ||||
| Proceeds from exercise of options and warrants | 15 | ** | ||||||
| Net cash used in continuing financing activities | (146 | ) | (430 | ) | ||||
| Cash flows from discontinued operations | ||||||||
| Net cash used in discontinued operating activities | (71 | ) | (214 | ) | ||||
| Net cash provided by discontinued investing activities | - | 1,949 | ||||||
| Total net cash (used in) provided by discontinued operations | (71 | ) | 1,735 | |||||
| Effect of exchange rate changes on cash and cash equivalents | 463 | (17 | ) | |||||
| Increase (decrease) in cash and cash equivalents | 290 | (634 | ) | |||||
| Cash and cash equivalents at the beginning of the period | 5,952 | 5,450 | ||||||
| Cash and cash equivalents at the end of the period | $ | 6,242 | $ | 4,816 | ||||
(*) Reclassified to conform with the current period presentation
(**) Less than $1
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Safe Harbor for Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other Federal securities laws. Whenever we use words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions, we are making forward-looking statements. For example, we are using forward-looking statements when we discuss our expectations regarding our growth or profitability, new opportunities, a positive adjusted EBITDA in 2017 and delivery long-term shareholder value. Because such statements deal with future events and are based on OTI’s current expectations, they are subject to various risks and uncertainties and actual results, performance or achievements of OTI could differ materially from those described in or implied by the statements in this press release. Forward-looking statements could be impacted by the effects of the protracted evaluation and validation periods in the U.S. and other markets for contactless payment cards, or new and existing products and our ability to execute production on orders, as well as other risks and uncertainties, including those discussed in the “Risk Factors” section and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2016, and in subsequent filings with the Securities and Exchange Commission. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be achieved. Except as otherwise required by law, OTI disclaims any intention or obligation to update or revise any forward-looking statements, which speak only as of the date hereof, whether as a result of new information, future events or circumstances or otherwise.
OTI Investor Contact
ir@otiglobal.com
OTI Press Contact
Neil Barr
Director of Marketing
+972-4-686-8004
press@otiglobal.com
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